Euro still climbing after resignation

The Euro continued to climb against sterling and the dollar today as the markets digested the impact of yesterday's shock resignation of German Finance Minister Oskar Lafontaine.

Europe's ailing currency fattened by a penny in early morning trading, taking it to 67.53, and strengthened slightly against the dollar, putting on a tenth of a cent to 1.1034 after closing a massive two cents higher in New York last night at 1.1023.

The surge in its fortunes is almost entirely due to the market's belief that now Lafontaine has gone, the European Central Bank will be free to cut interest rates at next week's meeting. He was an often strident demander of a lowering of interest rates, but the ECB was unable to respond for fear of being seen to bow to political pressure. Lafontaine's resignation effectively removes that pressure and frees the ECB.

The market's reaction has reversed the steady decline in the value of the euro since its launch on 1 January. The market is now looking for a cut of at least a fifth of a percentage point from the rate set last June of 3%.

The pound was steady against the dollar at 1.634, while the greenback strengthened fractionally against the yen to reach 119.7.